Creating Institutionalized Customers

Institutionalized customers

Institutionalized Customers: The True Value of Your Business

One of my favorite movies is “The Shawshank Redemption.” It contains a scene with Brooks, a 40-year prison inmate who is about to be paroled and is afraid of what his new life will be. The scene picks up right after Brooks has held another inmate with a knife in order to commit a crime so he won’t be released and have to face the unknown of society. (The clip contains spicy language, but you can view it here.) Whenever I hear the word institutionalized, I think of this scene.

Institutionalized customers bring in the revenue your company can forecast with great accuracy.

How does this movie clip and the term “institutionalized” relate to your business? According to John O’Dore, Principal & Managing Director of M&A Advisory Services at OneAccord Capital, the impact of this term as it pertains to your customers determines the predictability of future revenue into your business. Ultimately, institutionalized customers — or lack thereof — are a crucial factor in the valuation of your business as well as its ability to secure needed financing and alleviate the pressure of what might otherwise be very risky financial decisions.

Institutionalized customers bring in the revenue your company can forecast with great accuracy. These are the customers you may or may not necessarily sell to repeatedly, but who depend on you for guidance. They’re the people you build a relationship with over time as you work on mutually beneficial business together. It could be a mentoring relationship or a long sales cycle that involves meeting, talking, planning, strategizing and eventually pulling the trigger on a large, one-time transaction. Institutionalized customers refuse to make a move without first consulting you. You, in turn, seek their input to inform strategic decisions before instituting a change in direction or focus, or adding capacity. Most of us in business have this sort of customer. We all wish we had more of them.

Most of us in business have this sort of customer. We all wish we had more of them.

If you happen to be one of those businesses which does have institutionalized customers but wishes it had more, or if you’re realizing as you read this that your business doesn’t really have any, this series is for you. We will discuss steps you can take to create the kind of customers who bring all of the above benefits to your business.

At this point it’s important to point out the focus is on existing customers, not filling the pipeline with new opportunities. The ongoing hunt for new business is certainly an issue in its own right, but the process of institutionalizing customers, while a sales function, is a strategy which involves the entire organization. Which brings us to the first step in the process …

State the Mission

If the plan is to create the kind of customers who increase the value of your business, everyone in the business must understand this is an on-purpose strategy. So your first step to institutionalizing customers is to make the mission plain to your own people.


Check back next week for part two, when Dave dives into practical steps for creating institutionalized customers.

About the Author

Dave Mantel Portrait Dave Mantel is the founder and president of Acme Sales Development, LLC, a Seattle-area sales development company focused on increasing and sustaining topline revenue.

You can reach Dave by email or call him at (206) 948-1526.

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